18 Takeaways from a Retail Influencer Power Luncheon
By Lauren Parker
I recently co-moderated a Retail Influencer Luncheon organized by Berns Communications Group, and as expected, we had a lively discussion about the state of retail. We discussed the rapidly changing face of digital and physical retail, covering lots of ground from beauty to accessories to experiential selling. Naturally, Amazon dominated much of the conversation. In attendance was Dana Telsey, Telsey Advisory Group; William Susman, Threadstone Advisors; Nicole Reyhle, Retail Minded; Melissa Gonzalez; The Lionesque Group; Bob Phibbs, The Retail Doctor; Beth Goldstein, The NPD Group; plus Stacy Berns and Michael McMullan of BCG.
Beauty Services Are On the Rise
Why are there beauty services at Ulta, makeup classes at Sephora and a Blushington beauty lounge next door to Dry Bar? “Today you need services to sell the product in store,” said Dana Telsey of Telsey Advisory Group. “Plus, services help drive loyalty, and at Ulta, 90% of their sales come from loyalty.” CoverGirl’s new experiential mega store in Times Square is also filled with experiences and beauty advisors, plus it’s a more fitting venue for the brand’s revamped tagline (“I am what I make up” versus the previous “easy, breezy, beautiful”). Millennials just don’t go to department stores for beauty as their first choice, and are open to more intimate and service-oriented venues.
Location, Location, Location Might Not Be What You Think
Will a consumer go downstairs for beauty in a department store? Or seek out a shoe department on the 8thfloor? You bet she will … if the product is right. “One of the most creative inventions is 10022-SHOE,” said Billy Susman of Threadstone Advisors, referencing Sak’s Fifth Avenue’s 200,000-pair destination shoe department with its own zip code. “They proved you can direct the customer anywhere you want.” Besides, Bergdorf Goodman’s basement beauty department isn’t unlike a casino: no windows, no clocks, a tough to find exit and possibly air pumped in. You can never leave.
The Payless “Influencer Punking” Incident? We’re Not Buying It
Great marketing ploy? Definitely. Organic event? Not so sure. In case you’ve been living in a Wi-Fi-scrambling closet, Payless Shoes recently opened a “luxury store” called Palessi in Los Angeles, then pranked fashion influencers into paying hundreds of dollars for cheap shoes. Payless then turned their shocked reactions upon learning the truth into marketing gold. But our savvy retail experts weren’t so sure. “Does anyone really believe this?” quipped NPD’s Beth Goldstein? “What Prada-wearing influencer is going actually pay $600 for $19.99 plastic shoes?” Suspend your disbelief for a moment that influencers actually pay for anything out of their own pockets, especially at a branded launch party, and you’ll realize they surely received a stipend for said shoes. The scorecard? Payless received tons of press for their marketing brilliance, while the influencers came across as rather dim. Is pranking customers the new norm? Payless obviously took a page from the IHOP playbook, after the pancake chain faked a name change to IHOB to promote its burgers.
Pop Up to Permanent is Growing
“We worked with the RealReal on their three pop ups and each time they unlocked women who would spend three-times in the stores what they would online,” said The Lionesque Group’s Melissa Gonzalez. “Women were buying their Birkin bags and then coming back to the website. We also found that at the RealReal and M.Gemi pop ups, they unlocked super consumers, returns went down and it drew people to the websites.” Both brands have permanent stores now, seamlessly flowing the consumer between digital and brick and mortar.
Fashion Needs to Solve Problems to Succeed
In accessories, why are backpacks, fanny packs and luggage selling so well? It’s because they all solve problems, be it adding hands-free ease or solutions for getting to that vacation resort. “The idea is to solve a problem consumers didn’t even realize they had,” says NPD’s Goldstein. “I use the Quip toothbrush now that sends me a head replacement every three months. Who knew I needed a new toothbrush head every three months?”
Hashtag Marketing Is Key
For better or worse, our phones are the first thing we pick up in the morning and the last thing we look at each night, so hashtagging a store or product on Instagram is essential. “My 16-year-old niece starts her product research with hashtags,” says Retail Minded’s Nicole Reyhle. “It’s a very different way of shopping from her 45-year-old mother.” Smart retailers don’t just create that Instagram moment, but note the hashtag front and center, like Bloomingdale’s #heartofshoeyork signage alongside huge shoe artworks to kick off its new shoe department. Savvy consumers are also driving the creative, meaning that photo op has to be more interesting than just a wall of flowers or balloons. If it feels fake, the customer won’t respond. If it’s not authentic, or seems cheesy, brands would be better just not doing it at all.
Small is the New Big
Why did Macy’s buy rotating retail pop-up STORY and build the Macy’s Marketplace of rotating brands? The same reason Nordstrom scores with its ever-changing Pop-In@Nordstrom. Curation is key, and department stores are taking a page from the small boutique playbook. Another big to small shift is the growth of micro influencers, who are proving to be much more effective, targeted and authentic (not to mention less expensive) than macro ones. Nordstrom remains the go-to for creative and effective influencer partnerships, while Kohl’s has also proven itself adept, so look to these retailers for insights.
The Shop Small Movement is Growing
You know what else is going small? Store choice. American Express’ Small Business Saturday, now in its 9thyear, just had a record-breaking year, pulling in $17.8 billion the Saturday after Thanksgiving. “We’ve all seen the shuttered boutiques in our neighborhoods, and Shopping Small is highlighting the value of community,” said Reyhle, the event spokesperson, who added that even corporate companies like FedEx and Microsoft encourage their own customers to shop small, often via technology like Square.
Amazon is Actually Comprised of Small Businesses
Amazon has this reputation of being a bully to the brands, but are they necessarily the Goliath out to destroy every David? People forget that Amazon actually is comprised of so many small business. Brands are starting to choose how they want to sell: first party or 3rdparty. That said, Amazon iscollecting all its small brands’ selling data, so is it a deal with the devil? Possibly. About 70% of Black Friday and Cyber Monday is done on Amazon, and as brands “teach Amazon what sells,” Phibbs predicts brands will start pulling out more than jumping in. As Amazon grows its private label business and turns its data into merchandise, we’re all watching how it addresses the fashion space. Thus far, Amazon hasn’t really made the fashion inroads it’s made with other categories.
Retail as Science: Digital Data Can Influence Store Design
Amazon 4-Star Stores is unique because it’s completely designed by their data. Not only does it feature only Amazon items that have 4 star ratings and above. “I’m completely fascinated by this store as each product displays ratings and reviews that update in real time,” said Reyhle. “Plus, it’s designed differently than traditional stores. You enter and you have sight lines to everything in the store. And they also make signage ‘If you like this, you might like that,’ like they do online. Yes, it’s crowded and ugly (pretty much mirroring the Amazon.com shopping experience), but the store is driven by real data from thousands of online purchases.
At Amazon, You Go to Buy; At Brick and Mortar, You Go to Shop
But should online data influence store design? Not necessarily. Macy’s, for example, isn’t using Macys.com data or product ratings to emulate an Amazon 4-Star-like experience. “The more retailers can make their instore experiences like online, they’re just signing their death knell,” said Phibbs. “It would be awkward on Amazon if a green dress popped up while you were looking for baby strollers. But in an actual store, you might think it’s interesting and want to check it out.”
It’s Not ALL Amazon’s Fault
It’s easy to blame Amazon for the demise of Main Street retailers, department store consolidations and any other world problem you can think of, but retailers have to take responsibility for their own failures too. All that VC money isn’t going to make them perfect retailers, and it can burn through rather quickly. We’ve never seen prettier stores, but often there’s no one to talk to for help. Stores need to return to humanity in 2019! FAO Schwartz is back and suddenly they’re a great retailer? Plus, in extreme cases, store employees are sabotaging efforts. “What if your own customers are teaching the customer to use your stores as showrooms?” asked Phibbs, who told the store of the Pottery Barn store shopper who had $3,000 worth of merchandise at checkout, only to be told by the employee to put it away, select the items on the store’s website, then abandon the cart and wait for the discount emails to come, then wait longer, and get more coupons. “What if the Trojan Horse is from within?”
Digitally native and small branded stores have employees who all know the story, can relay that to a customer, plus feel personally invested in the brand. But how can they grow without turning into a “Pottery Barn” with high turnover and salesperson indifference?
Salespeople Can’t Be Replaced
Yes, there are cashier-less checkouts but people aren’t necessarily being replaced by machines. Ideally, that will relieve salespeople of that transactional side and free them up to help customers elsewhere in the store. Even cashier-less grab-n-go Amazon Go stores, which are slated to add as many as 3,000 doors by 2021, still have employees.
Cannabis Business is Getting HIGH-er
There is a rapidly growing acceptability of cannabis, driven by the increase of state laws passing legalization, and the growing visibility of dispensaries. In fact, according to the NPD, cannabis dispensaries yield more per square foot than Apple and Tiffany stores! This is definitely something to watch in 2019 from a retail perspective, not to mention investment.
Vending Machines Aren’t Just for Snacks
Already big in Japan, expect to see more vending machines selling non-traditional items here in the States. Benefit has airport vending machines for beauty and Uniqlo sells compressed coats via vending machine. Also popping up around the holidays are philanthropic vending machines, like the “Giving Machine” near Lincoln Center, where you can gift things like meals, socks or even an eye exam for the needy around the world with a credit card swipe.
Can the Disposable Fashion Generation Really Believe in Sustainability?
Millennials and Gen Z behave paradoxically; loving fast fashion for providing fresh outfits for Instagram posts yet vocally objecting to the environmental impact of such retailers and throwaway fashion. A push toward less waste is helping drive rental and pre-owned fashion retailers, all the while threatening full-price brands. We’re all watching Rent the Runways’ IPO next year to see how that category plays out. Meanwhile, fast-fashion waste continues to be epic. Just ask H&M, who had $4.3 billion of unsold merchandise to deal with.
We’ve Determined the Real Winner of the Free Shipping Wars
It’s not about who provides 2-day shipping versus 1-day shipping, or free shipping versus paid. The real winners of the shipping wars? Cardboard boxes! With free shipping both ways practically expected for fashion transactions, consumers are ordering the same item in different sizes and colors, just to return most of the order. There’s money to be made in packaging, even if the environment loses.
Brandless Is Definitely a Brand
Brandless might consider itself the anti-brand, and it’s true that consumers aren’t lining up around the block for weekly Thursday drops like they do for Supreme, but they are still a (savvy) brand. With designer logos like Gucci white hot now, it only makes sense that there would be a brand backlash. “Brandless is fantastic and has an interesting concept and story,” says Susman. “It’s brand agnostic, but make no mistake, it’s still a brand.